Royalties tax limitation where beneficial owner is resident prevents excessive source-state withholding; special connections adjust taxation. Article 12 permits residence-state taxation of royalties while allowing source-state taxation subject to a reduced limitation when the beneficial owner is resident of the other Contracting State; competent authorities shall settle application of that limitation. Royalties are broadly defined to cover payments for use of intellectual property, equipment, and technical information. The limitation does not apply if the beneficial owner has a permanent establishment or fixed base in the source State and the royalties are effectively connected thereto, in which case Articles 7 or 15 govern. Deemed-source rules and arm's-length adjustment for related-party distortions are also provided.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Royalties tax limitation where beneficial owner is resident prevents excessive source-state withholding; special connections adjust taxation.
Article 12 permits residence-state taxation of royalties while allowing source-state taxation subject to a reduced limitation when the beneficial owner is resident of the other Contracting State; competent authorities shall settle application of that limitation. Royalties are broadly defined to cover payments for use of intellectual property, equipment, and technical information. The limitation does not apply if the beneficial owner has a permanent establishment or fixed base in the source State and the royalties are effectively connected thereto, in which case Articles 7 or 15 govern. Deemed-source rules and arm's-length adjustment for related-party distortions are also provided.
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